Running Your Own Business? Here Are Tax-Saving Tips For Entrepreneurs

At a time when the last minute tax saving rush is seeing salaried employees cribbing about income tax eating away their salaries in these last months of this financial year 2023-24, things are no less easier for entrepreneurs.

Income tax is a harsh reality for both salaried as well as entrepreneurs who are running a business too. Besides the usual tax saving ways such as donations, home loan EMIs etc, there are some not so known ways which entrepreneurs can utilize to save income tax.

Tax-Saving Tips For Entrepreneurs

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1.Don't miss out on business utility expenses

Entrepreneurs can deduct business or utility expenses for using their phones and cars for work-related purposes.

For instance, if they are used for a justifiable business purpose, costs for cars, tolls, phones, parking, driver's fees, etc., may be claimed as business utility expenses. Furthermore, if one works from home, additional costs, like electricity bills, can be claimed.

These have the potential to lessen startup and entrepreneur tax burdens. A few business utility expenses that can be written off for tax savings, include: depreciation costs on assets, preliminary expenses, convenience costs, and regular expenses.

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2.Recover costs incurred for lodging and travel

Entrepreneurs are required to relocate frequently as a result of various business-related tasks. And nobody knows it better than you if you are a business owner. Therefore, one thing you might want to think about is not using your account to pay for travel or lodging-related expenses. File it under the company's account instead.

3.Avail benefits of hiring family members

Hiring family members to help with startup costs and paying them a salary like regular employees is one of the best ways for entrepreneurs to lower their tax burdens. In the event that the family member has no other sources of income, the company may pay them up to ?2.5 lakh annually (based on the current tax slab) without requiring the relative to pay any taxes.

In addition to helping the business expand, this gives the entrepreneur the benefit of having reliable people in their vicinity. Since this is an expense incurred by the business, it can be deducted from its taxable income, lowering its overall expenditure.

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4.Try to invest the surplus in marketing

Everything is going digital as we enter the Digital Era. You can therefore abandon traditional marketing methods and move your goods and services online.
You will gain from it in two ways. First off, you can expand your clientele and grow your business significantly by experimenting with new digital marketing strategies.

Second, all marketing-related expenses are tax deductible. Therefore, you can also save money on this. Consequently, you can save on taxes by investing the extra money you have at the end of the year in marketing and advertising for your startup.

5.Check out benefits on depreciating equipment

business equipment tax saving/totempool

The Income-tax Act offers several advantages to business owners who operate manufacturing enterprises, such as extra depreciation and section 35AD-designated business status. If new machinery or equipment is installed in a manufacturing company during the year, in addition to the regular depreciation, the units in question are also entitled to an additional depreciation of up to 20% in the year that the machinery or equipment is put into use.

In a similar vein, a new section known as section 35AD was created, which allows businesses that engage in the specified businesses to deduct all of their capital expenditures. The purpose of section 35AD benefits was to incentivize private sector investment in public infrastructure, including highways, hospitals, and cold storage facilities.

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